Delaware Business Litigation Report

Superior Court Grants Motion to Amend Answer, Even Though Defendant Had Some Knowledge of New Fact Before Filing

Delta Eta Corp. v. University of Delaware, 2007 WL 4578278 (Del. Super. Ct., Dec. 27, 2007).

This decision addresses a party’s ability to amend its answer, under Rule 15(a), when the 20-day period to amend as a matter of right has expired. The litigation arose when the University of Delaware terminated a lease it entered into with a fraternity to maintain a chapter house and then took title to the property, triggering a requirement under the agreement that it pay the fraternity the fair market value of the remainder of its leasehold interest.

In its answer, UD admitted that it owed the amount determined by a neutral appraiser to be the value of the interest. But when the fraternity moved for summary judgment, UD moved to amend its answer to deny that the amount was accurate. UD argued that it learned of severe mold damage to the chapter house that should have been taken into account in the valuation.

The court granted UD’s motion to amend, noting that it favors a liberal interpretation of Rule 15(a).  In reaching this decision, the court considered such factors as undue prejudice, bad faith, and futility.  The court found that the fraternity failed to show how it was unduly prejudiced by the amended answer, that there was no bad faith because UD did not know the full extent of the mold problem until after it filed its answer, and that the amended answer could not be considered futile since it created an issue of fact.    

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